Whirlpool
RANBAXY LABORATORIES LTD RESEARCH
EQUITY RESEARCH July 10, 2008
RESULTS REVIEW
Share Data Market Cap Price BSE Sensex Reuters Bloomberg Avg. Volume (52 Week) 52-Week High/Low Shares Outstanding Valuation Ratios (Consolidated) Year to 31 December 2008E EPS (Rs.) 14.7 EPS Growth (%) 27.8% PER (x) 36.6x EV/ Sales (x) 3.2x 19.2x EV/ EBITDA (x) Shareholding Pattern (%) Promoters FIIs Institutions Public & Others Relative Performance
700 600 500 400 300 200 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08
Ranbaxy Laboratories Ltd
Daiichi deal to drive the growth
Rs. 200.9 bn Rs. 538.30 13,926.24 RANB.BO RBXY IN 0.5 mn Rs. 613.70 / 299.90 373 mn
Hold
In June 2008, Daiichi Sankyo signed a deal to acquire 34.8% controlling stake in Ranbaxy, which will improve the financial strength of Daiichi and will provide enhanced R&D skills for new drug discovery to Ranbaxy. Moreover, this deal will help Ranbaxy to have access of other markets. Hence, we believe that it is a win-win situation for both the Companies. In addition, Ranbaxy acquired 14.7% stake in Orchid Chemicals & Pharmaceuticals Ltd., which manufactures Cephalosporins and Penams. We expect that this deal will help Ranbaxy in
2009E 17.7 20.2% 30.4x 2.7x 16.2x
gaining traction for manufacturing new drugs, and in turn Orchid will be able to access its strong distribution network. The launch of a generic version of Imitrex in Dec’08, which is still in an FTF status, will boost the Company’s sales in CY09E. Apart from Lipitor, Nexium will contribute around USD 1.5 bn revenues over 2009-2014. However, we have not included this in our projections for CY09E. We expect the revenue to
35 18 23 24
grow at a CAGR of 15.4% for CY07-09E. During the quarter, Ranbaxy demerged its R&D unit into a separate subsidiary, Ranbaxy Life Science Research Ltd. (RLSRL), which will operate as an independent R&D unit with dedicated resources. Consequently, the Company may save its cost
EQUITY RESEARCH July 10, 2008
RESULTS REVIEW
Share Data Market Cap Price BSE Sensex Reuters Bloomberg Avg. Volume (52 Week) 52-Week High/Low Shares Outstanding Valuation Ratios (Consolidated) Year to 31 December 2008E EPS (Rs.) 14.7 EPS Growth (%) 27.8% PER (x) 36.6x EV/ Sales (x) 3.2x 19.2x EV/ EBITDA (x) Shareholding Pattern (%) Promoters FIIs Institutions Public & Others Relative Performance
700 600 500 400 300 200 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08
Ranbaxy Laboratories Ltd
Daiichi deal to drive the growth
Rs. 200.9 bn Rs. 538.30 13,926.24 RANB.BO RBXY IN 0.5 mn Rs. 613.70 / 299.90 373 mn
Hold
In June 2008, Daiichi Sankyo signed a deal to acquire 34.8% controlling stake in Ranbaxy, which will improve the financial strength of Daiichi and will provide enhanced R&D skills for new drug discovery to Ranbaxy. Moreover, this deal will help Ranbaxy to have access of other markets. Hence, we believe that it is a win-win situation for both the Companies. In addition, Ranbaxy acquired 14.7% stake in Orchid Chemicals & Pharmaceuticals Ltd., which manufactures Cephalosporins and Penams. We expect that this deal will help Ranbaxy in
2009E 17.7 20.2% 30.4x 2.7x 16.2x
gaining traction for manufacturing new drugs, and in turn Orchid will be able to access its strong distribution network. The launch of a generic version of Imitrex in Dec’08, which is still in an FTF status, will boost the Company’s sales in CY09E. Apart from Lipitor, Nexium will contribute around USD 1.5 bn revenues over 2009-2014. However, we have not included this in our projections for CY09E. We expect the revenue to
35 18 23 24
grow at a CAGR of 15.4% for CY07-09E. During the quarter, Ranbaxy demerged its R&D unit into a separate subsidiary, Ranbaxy Life Science Research Ltd. (RLSRL), which will operate as an independent R&D unit with dedicated resources. Consequently, the Company may save its cost